Tokyo (Reuters): Asian shares hit 21-month highs on Tuesday while the dollar and US bond yields were on the backfoot on the prospect of a less hawkish than previously expected Federal Reserve policy trajectory.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.3 percent in its eighth consecutive day of gains with tech-heavy Seoul and Taipei shares .KS11 .TWII hitting two-year highs while Hong Kong's Hang Seng .HSI scaled 1-1/2-year highs .

European shares are expected to open slightly higher, with spread-betters seeing a rise of up to 0.1 percent in Britain's FTSE .FTSE, Germany's DAX .GDAXI and France's CAC .FCHI.

Japan's Nikkei .N225 dropped 0.3 percent, weighed by financial stocks, which were hurt by lower U.S. yields and exporter stocks, which fell on the yen's gains against the dollar.

While Asian shares have been supported by signs of strong global economic growth, concerns about protectionism cast a shadow after financial leaders of the world's biggest economies dropped a pledge to keep global trade free and open, acquiescing to an increasingly protectionist United States.

Wall Street shares drifted lower on Monday as investors worried that President Donald Trump's plan to cut taxes and boost the economy could take longer than earlier expected.

"Any fiscal spending by the Trump administration will not come until August at earliest and probably much later. So any economic benefit of that will show up only next year," said a senior trader at a European bank. "So the markets are gradually pricing that in, winding back their initial rally after the elections."